The bill would also allow the university system's four research centers, which includes the University at Albany, to add an additional three percent tuition raise on top of that as part of a "Rational Plus Plan." The NYSUNY 2020 Challenge Grant legislation allows each research center to present development plans that could see each campus receive $35 million in state grants.

"The current tuition system does not serve our students, schools, or state," Cuomo said in a prepared statement. "This bill brings rationality to the SUNY tuition system, by allowing students and parents to reasonably plan for college expenses, instead of being subject to dramatic tuition increases and uncertainty."

The bill permits the Empire State Development Corporation to issue $80 million in bonds for the SUNY Challenge Grant Program.

While the tuition hike has had significant problems getting through the state Assembly, Speaker Sheldon Silver has recently expressed openness to the possibility, as long as it didn't price students out of the system or sweep money into the general fund.

Silver spokesman Mike Whyland said he had "no immediate comment" on Thursday's bill, which has been discussed for months.

The new legislation has stronger measures to protect low income students. To offset the tuition increase, students who qualify for Tuition Assistance Program, or TAP, would not pay the increase. SUNY would also establish a revolving loan fund to provide low-interest student loans.

SUNY tuition is $4,970 annually. A 5 percent increase would raise that $248.50 per year, bringing the total to $5,218.50 if the bill is approved.

SUNY presidents, union leaders, administrators and the system's student government have all supported a rational tuition increase. United University Professions, the union representing SUNY employees, has supported tuition hikes, though it blasted development plans offered by the University at Buffalo and Stony Brook University because of their emphasis on construction projects that increase partnerships with private businesses. UAlbany officials want to renovate the school's Alumni Quad/Midtown area to the east of the main campus to create a biomedical and information center and Stony Brook officials proposed a new cancer research center.

A news release in support of the proposal from UAlbany President George Philip included no less than 30 statements of support from local politicians, business leaders and school officials. The group includes Albany schools superintendent Ray Colucciello, Albany Mayor Jerry Jennings and Jerel Golub, president of the Golub Corporation, operator of Price Chopper supermarkets.

"The governor's NYSUNY 2020 challenge grant program is an important initiative closely coupled with the need for rational tuition and tuition plus, which will allow the University at Albany to grow its academic enterprise, create new jobs, attract new research funding, and spur economic growth in the Capital Region," Philip said in a statement.